Cytodyn Inc (CYDY)

[fred198484]

The nice run in the stock recently likely reflects both the impending completion of the combo trial enrollment and the equally impending share offering. Underwriters typically push a stock higher before the offering is announced in order to get their client (CYDY) a better price. Since we already know the drug works well, the enrollment completion is nearly equivalent to the primary endpoint being reached. We will get the official verification of the primary endpoint data being good likely a month or so after enrollment is completed.

The big question in my mind right now is what type of offering is on its way? Will it be for a small amount of money (say $15 million) or for a larger amount ($25 - $50 million). Either way, it will be highly dilutive. What is not yet clear is if that will matter much to the stock price If the money raised ensures financial stability all the way through commercialization, the market may then see the financial risk in the stock as largely gone and react positively (after an initial hit to the share price). New management usually likes to take the hard medicine up front, so don't be surprised if the offering is large. On the other hand, it may still be too hard for the company to raise a large amount of cash at this point and they may have to continue to opt for smaller offerings until they are closer to commercialization.